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UAE Corporate Tax: Technology to help businesses stay compliant

Cloud-based accounting systems help businesses automate tax calculations, generate tax reports

With the UAE intriducing corporate tax from June 1, companies in the country are now focusing on getting their tax liabilities compliant with the latest government rules.

Technology has come a long way in helping businesses streamline tax processes and stay compliant. Cloud-based accounting systems help businesses automate tax calculations, generate tax reports in Federal Tax Authority’s (FTA) mandated format, and help in maintaining accounting records and documents securely.

“These capabilities allow businesses to reduce errors and the manual effort that goes into staying compliant. It also provides internal control capabilities such as audit trail, access control, and transaction approval workflows. This ensures complete transparency and data integrity which ultimately protects the business from misuse of sensitive information,” Prashant Ganti, head of product management, Zoho Finance and Operations Suite, told Khaleej Times. Additionally, good accounting software will help businesses to automatically future-proof their business for any new government-mandated regulations that may be introduced, he added.

Excerpts from an interview:

What are your thoughts on the future of tax compliance in the UAE?

With advances in technology, the UAE will likely see the use of automation for tax filing which will reduce manual errors, streamlining the entire process. Additionally, with the evolving tax regulations, businesses might be required to do continuous reporting and engage proactively with the tax authorities through real-time collaboration.

How will the new corporate tax regime in the UAE initiative impact businesses of different sizes and industries?

The new law will have varying impacts on businesses of different sizes and industries. However, the government has taken that into consideration while implementing the law. Businesses with a taxable income up to Dh375,000 will be subject to 0 per cent tax, and entities with a taxable income of above Dh375,000 will be subject to 9 per cent tax.

Businesses with annual revenue below Dh3 million can apply for small business relief. Additionally, qualifying entities in over 30 free zones will benefit from a 0 per cent tax rate. This alleviates some of the financial pressure and compliance burden for smaller businesses. The growth of key sectors in the free zone will also be supported.

How has been Zoho helping businesses in the UAE to comply with the new corporate tax law?

When VAT was implemented in the country, we introduced the UAE edition of Zoho Books to help businesses to fulfil their tax obligations. We recently launched corporate tax capabilities in Zoho Books, enabling businesses to automate tax calculations and ensure accurate tax filings. Additionally, corporate tax reports can be instantly generated in the format that the FTA will introduce. This will not only simplify the tax filing process but also reduce the manual effort involved.

According to the FTA guidelines, businesses must also store records and documents for seven years. Zoho Books allows businesses to securely maintain supporting documents and organize financial data on the cloud.

Overall, our aim is to equip UAE businesses with the tools they need to effectively navigate and comply with the new corporate tax regulation.

How is Zoho planning to facilitate businesses in the UAE to continue adhering to future tax changes?

Zoho is committed to providing future-proof tax compliance for UAE businesses. We always stay up to date with the latest government initiatives and ensure that we support businesses with the right capabilities. Zoho Books rolls out continuous and automatic updates in the backend without causing any disruption to our customers. Additionally, we will continue to provide comprehensive resources like guides, articles, FAQs, webinars, and workshops to educate businesses on important tax updates. We also have a growing network of accountants and implementation partners who support businesses with setting up frameworks and processes for a smooth transition. Our customers have found these initiatives to be helpful in navigating the ever-evolving compliance landscape.

What impact does Zoho foresee on the economic growth of the UAE with reference to the implementation of corporate tax?

The corporate tax which is in line with OECD global standards is expected to have a positive impact on the country’s economic growth. It will not only increase revenue for the government but also reduce dependency on a single sector, promoting long-term growth.

Moreover, as per the law, businesses are expected to ensure compliance by maintaining accurate records and filing taxes and payments on time. This provides a greater level of transparency and accountability among businesses and is likely to attract more investments which will ultimately result in economic growth.

Some businesses are yet to familiarise themselves with the new law and may not have the necessary systems, processes, and expertise for tax compliance. What is your role in this regard?

We understand that businesses are still in the process of transitioning to the new law and may not have the necessary guidance they need to be compliant. This is the reason why we went beyond providing corporate tax capabilities by offering a variety of resources to help businesses familiarise themselves with the new law. Our expert-led webinars, guides, FAQs, and workshops provide a comprehensive overview of the regulation, and its requirements, helping businesses transition smoothly.

To understand our customer’s preparedness, we recently conducted a survey among Zoho Books users in the UAE. The results revealed that 44 per cent of the respondents are setting up frameworks to ensure compliance. Over 85 per cent felt that understanding the law and its requirements might be challenging in becoming compliant. This emphasises the need for guidance among businesses, which helped us tailor our resources to provide them with the necessary support.

More importantly, more than 80 per cent of our customers were confident that Zoho Books will help them fulfil their corporate tax obligations. Businesses can be assured that any new regulations introduced by the government are automatically taken care of by Zoho Books. They can rely on Zoho Books to simplify the tax compliance process and reduce manual efforts.

Zoho Books accommodates businesses of all sizes by providing easy configuration of tax settings. Once businesses register with the Emara Tax portal, they can enter their tax registration number, select the applicable percentage, and the filing date. The system will then automatically calculate the tax amount and generate the tax return. Our application is built to simplify compliance processes for businesses of all sizes and will effectively help them fulfil their tax obligations.